Southeast Asia Poised for New Gains and Risks Under Trump’s Trade Agenda
As Donald Trump’s return to the presidency looms, Southeast Asian nations are preparing for both challenges and opportunities in trade and investment. Vietnam, previously a major winner in the US-China trade war, could face new tariffs due to its trade surplus with the US. Meanwhile, Indonesia’s economy, buoyed by strong domestic consumption, expects limited impact from US tariffs, but may still be vulnerable to a weaker Chinese market. Thailand aims to capitalize on its neutral geopolitical stance, attracting businesses seeking an alternative manufacturing base to China. Similarly, the Philippines is pursuing a “mutually beneficial” economic partnership with the US, bolstered by strong defense ties and plans to supply semiconductors and energy in support of US manufacturing ambitions. Southeast Asia’s diverse economic strategies and geopolitical balancing acts are positioning the region to both benefit from and navigate potential disruptions in Trump’s trade policies.
Vietnam’s Tightrope in a New Trump Era
Vietnam thrived amid the US-China trade war Trump ignited in his first term, drawing in major foreign investment and expanding its exports, especially to the US. However, if Trump returns to office with sweeping tariffs — up to 60% on Chinese goods and 20% on imports from other nations — Vietnam may find itself under scrutiny. The country’s large trade surplus with the US, second only to China, risks sparking new tariff threats, with economic analysts warning this could hurt sectors like textiles, electronics, and furniture. Although companies such as Samsung are likely to stay due to Vietnam’s low labor costs, its ambitions to attract high-tech manufacturing may be hindered. Vietnam’s leadership, mindful of its trade reliance on both the US and China, may attempt to appease a Trump administration through LNG purchases and cracking down on Chinese goods illegally routed through its borders. Despite the looming challenges, Vietnam’s leaders are hopeful that diplomatic skill and strategic economic decisions can help balance its trade relationships amid rising protectionism.
Trump, who visited Vietnam twice during his first term, may have developed a lasting appreciation for the country. Recently, the Trump Organization unveiled plans for a US$1.5 billion development in northern Vietnam, including hotels, golf courses, and residential properties, in partnership with a local industrial park developer. “Vietnam has tremendous potential for luxury hospitality and entertainment,” said Eric Trump, executive vice president and son of the president-elect, highlighting the project’s promise.
Elon Musk, a prominent Trump supporter who may assume an official role in the new administration, has already shown interest in supporting Vietnam. Musk’s company, SpaceX, is planning a US$1.5 billion investment in Vietnam to expand its Starlink satellite service in the near future.
Indonesia’s Resilience Amid Trump’s Tariff Storm
Analysts expect that Indonesia will weather Trump’s proposed tariffs better than its export-reliant Asian peers, thanks to its strong domestic consumption, which drives over half of its economic output and has sustained steady 5% growth over the last decade. However, President Prabowo Subianto’s 8% growth target means Indonesia must boost exports and investment. If US tariffs worsen China’s market downturn, demand for key Indonesian exports like coal and palm oil could decline, but this may also create opportunities to expand exports to the US and attract foreign investment as companies look beyond China. Sectors like electronics, furniture, and textiles could gain, though Indonesia’s commodity-based economy may not fully capitalize on supply chain diversification like its manufacturing-focused neighbors.
Thailand’s Neutral Stance Lures Investment Amid Trade Tensions
With Trump’s election victory poised to intensify the US-China trade war, Thailand is positioning itself as a neutral, investment-friendly hub for companies seeking alternatives to China. Commerce Minister Pichai Naripthaphan anticipates increased interest from US and Chinese firms, highlighting Thailand’s reputation as a stable and welcoming partner amid global tensions. Already a manufacturing leader in electronics and automobiles, Thailand is actively courting tech giants like Nvidia, Alphabet, and Microsoft, with US firms such as Seagate and Hewlett Packard Enterprise exploring expansion plans. Pichai believes Thailand’s balanced geopolitical stance and appeal as a “safe” investment site will drive growth beyond its recent low rate, enabling it to capitalize on shifting supply chains in Asia.
Philippines Eyes Stronger US Ties in Trump Era
The Philippines is crafting a strategy to deepen its economic ties with the US as Donald Trump prepares to re-enter the White House, Manila’s ambassador to Washington, Jose Manuel Romualdez, announced. He emphasized that while defense cooperation remains steady, economic relations will require close attention, especially as Trump’s protectionist policies could disrupt global trade. To sustain infrastructure aid and attract more US investments, the Philippines aims to position itself as a trusted supply chain partner, especially in semiconductors and energy. Romualdez, who helped stabilize US-Philippine relations after a pro-China shift under former President Duterte, is optimistic about preserving defense commitments in the South China Sea under the 1951 Mutual Defense Treaty. He highlighted the Philippines’ strategic importance to the US in countering China’s regional influence, making the alliance economically and geopolitically “mutually beneficial.”
Investment Opportunities in Southeast Asia Amid Trump’s Trade Policies
Under a Trump administration, investors may find key opportunities in Southeast Asia, where diverse economies could benefit from shifts in global trade dynamics. Thailand, with its neutral stance, is well-positioned to attract companies relocating operations from China, particularly in electronics and AI infrastructure, making it attractive for tech and manufacturing investors. Vietnam could see continued growth in sectors like textiles and electronics, though tariff risks on its exports to the US may warrant caution. Indonesia’s strong domestic market shields it somewhat, yet it offers growth potential in light manufacturing and resource exports. Meanwhile, the Philippines’ robust US defense ties and emerging semiconductor role could attract investors in supply chains and energy sectors. Altogether, Southeast Asia presents diverse avenues for investment amid Trump’s trade agenda, with sector-specific benefits across tech, manufacturing, and resources.
SeA (Southeast Asia) Focus Portfolio Performance:
From its inception on December 20, 2023, to October 31, 2024, the portfolio, which invests in the highest-quality and fastest-growing businesses in Southeast Asia at attractive prices, delivered a total return of 37.3%, outperforming all Southeast Asian country index funds.
Follow the portfolio here.